Recommendation From Other Apparels & Accessories Sector

This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon

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Goldiam International Limited, one of the exporters of luxurious diamond jewellery from India, has been in the business for the last two decades. The company's business model of being an original equipment manufacturer (OEM) to retailers globally has given the company unmatched brand equity. The company operates in two segments jewellery manufacturing and investment activity, with jewellery manufacturing contributing around 93 per cent to the company’s standalone turnover. 

The FY2016 saw a decline in the sector’s aggregate exports by 3.46 per cent to USD 38,599.18 million due to the slump in global economic growth and decline in profitability of industries. However, even in the face of adverse conditions in the global market, Goldian International performed exceedingly well during the past fiscals. 

The volatility in gold prices exposes Goldiam International business to bullion risk as gold forms about 30 per cent of the cost of the finished product.To counter this, the company hedges its outstanding positions, thereby mitigating the risk associated with the volatility in the gold prices. 

While the US continues to be the company's prime export destination, the company is planning to diversify and tap the markets in the Middle East, Thailand, Europe, Russia and Japan to reduce the vulnerability of economic slowdown in any one geographic location.

There are signs of improving consumer confidence and major policy changes in some of the developed markets, which may provide the required momentum to spur global growth and kick-start the path of recovery of this sector. We can hope that the shining metals of India will bring more sparkle to its economy and Goldiam Internmational looks well-poised to utilise this opportunity. 

On the financial front, Goldiam International posted 16.24 per cent decrease in its revenue from Rs31.46 crore in Q4FY16 to Rs26.35 crore in Q4FY17. However, the company’s operating profit stood at Rs7.03 crore in Q4FY16, up by over 215 per cent from a Rs2.23 crore in Q4FY16. The profit after tax of the company stood at Rs5.23 crore, with an increase of over 213 per cent in the fourth quarter of FY17 on a yearly basis. 

On an annual basis, the company’s revenue increased 4.97 per cent to Rs138.42 crore in FY17 from Rs131.86 crore in FY16. The company’s operating profit stood at Rs23.85 crore in FY17, up by 11.29 per cent as against Rs21.43 crore in the FY16. The company’s profit after tax stood at Rs16.99 crore, up by 10.90 per cent in FY17 from Rs15.32 crore in FY16. 

The consolidated turnover of the company, its subsidiaries and joint ventures increased from Rs321.55 crore in FY16 to Rs 330.02 crore in FY17, recording an increase of 2.63 per cent. 

On the valuation front, Goldiam International’s share price is currently trading at PE of 7.31x as compared to industry PE of 19.82x which makes the scrip extremely alluring.